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Income Gap in New York Is Called Nation's Highest

ALBANY, Jan. 26 - New York continues to have the highest income disparity between rich and poor of any state, according to a new study by two national economic policy groups.

The average income of the richest fifth of New York State families is 8.1 times the average income of the poorest fifth, according to the study, which drew from census data compiled by the Economic Policy Institute and the Center on Budget and Policy Priorities, two liberal research groups based in Washington.

Nationwide, families in the top fifth made 7.3 times more than those in the bottom fifth. While New York has been at the top of the income gap list for several years, it ranked 11th in the early 1980's, when the difference between the average income of the top and bottom fifths was 5.6 times.

New Jersey was ninth in income disparity, with a difference of 7.5 times, and Connecticut was 23rd, with a gap of 6.9 times.

From 1980-1982 to 2001-2003, the periods examined in the study, average incomes grew by 18.9 percent nationwide, or $2,664, for the poorest families and 58.5 percent, or $45,101, for families among the top fifth of income earners.

"The biggest thing is the decline in wages for the low and moderate income people," said Elizabeth McNichol, an author of the report. "Part of it is large periods of higher than average unemployment, globalization -- jobs going overseas -- the shift from manufacturing jobs to lower paying service sector jobs, immigration, the weakening of unions, and the fact that the federal minimum wage has been declining relative to inflation."

Added to that, an increase in investment income helped the rich get richer, the study said.

Tax policy played a role in the widening of the gap over the years, according to the study, which adjusted income for federal but not state taxes. On the state level, Gov. George E. Pataki has proposed another slate of personal income tax cuts and rebates, and more than half of the value of the package would go to the state's wealthiest 10 percent.

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"We've made taxes less progressive -- we've cut the top rate by more than half since the early 70's, and Pataki's proposing to cut it again," said Trudi Renwick, a senior economist at the Fiscal Policy Institute in Albany, a liberal group that collaborated in the income study and presented its own report on New York.

Ms. Renwick said increases in property taxes had been more damaging to the middle class than to the wealthy, but gave credit to Mr. Pataki for the state's version of the earned-income tax credit, a break for low income workers, calling it "about the best in the country."

Among the groups' many prescriptions were raising the minimum wage, broadening unemployment insurance and realigning the tax burden away from the lower and middle classes -- notions conservatives tend to see as counterproductive.

E.J. McMahon, a budget expert at the conservative Manhattan Institute, attributed the large income imbalance to "the large number of foreign immigrants in New York, who are largely poor, unskilled workers."

"To me, the whole focus of this report is, in my view, totally misplaced," said Mr. McMahon, adding that the more important question was what was keeping workers from moving from one income strata to another. "One barrier is education, or the lack of educational attainment, and that would imply that we need to focus on making schools better," he said.

Ms. Renwick cited a court order to pump billions into city schools, which Mr. Pataki is appealing.

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A version of this article appears in print on January 27, 2006, on Page B00004 of the National edition with the headline: Income Gap in New York Is Called Nation's Highest. Order Reprints|Today's Paper|Subscribe